U.S. economy slows sharply...

[marmar]

Has the great unraveling begun?

U.S. economy slows sharply, inflation heats up in second quarter

Friday, July 28, 2006
WASHINGTON - The U.S. economy's growth slowed sharply in the second quarter, logging just a 2.5 percent pace as consumers tightened their belts and spending on home building dived. Inflation, however, shot up.

The latest snapshot of gross domestic product released by the Commerce Department on Friday showed that the overall pace of economic activity in the April-to-June quarter was less than half that of the January-to-March quarter, when the economy zipped along at a 5.6 percent annual rate, the fastest in 2 1/2 years.

Gross domestic product measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic standing.

The second-quarter's performance - which reflected the bite of high energy prices and rising interest rates on people and businesses as well as a cooling in the once red-hot housing market - was weaker than the 3 percent pace analysts were forecasting.

The 2.5 percent pace was the slowest since a 1.8 percent growth rate in final quarter of 2005, when the economy was suffering fallout from the devastating Gulf Coast hurricanes.

Even though the economy cooled in the second quarter, inflation heated up.

An inflation gauge closely watched by the Federal Reserve showed that core prices - excluding food and energy - jumped by 2.9 percent in the second quarter - far outside the Fed's comfort zone. That was up from a 2.1 percent increase in the first quarter and marked the highest inflation reading since the third quarter of 1994, when core inflation rose by 3.2 percent.

The rest is at: http://home.peoplepc.com/psp/newsstory.asp?cat=breakingnews&id=20060728/44c98bc0_3421_1334520060728-1083732370

[Demeter]

1. Gee, Do You Think the Price of Gasoline Might Have Anything To Do w/This?

The glass is now totally empty, folks. Anyone who says otherwise is lying, insane, or Republican.

[rpannier]

2. Disagree

I looked at the glass and I clearly saw mold forming at the bottom.

[Skittles]

27. I looked at the glass and saw backwash

I think its formal name is freerepublic.com

[Javaman]

52. Actually, that bottom of the glass snapped off a while back . nt

[Canadian_moderate]

10. The high cost of energy is generally better for us...

in the long run. It will force us to stop being so damn wasteful. It will stop urban sprawl into an endless suburbia. It will force us to look for more sustainable energy sources.

If fossil fuels are too cheap, it reduces the incentive for cleaner and more sustainable alternative energy sources.

BTW, in Canada, as a net exporter of oil, the high cost of oil is created a massive boom for exporting provinces such as Alberta and Newfoundland. At the same time, it's killing the manufacturing sector in Ontario with high energy costs making it tough on manufacturers to be competitive.

[suziedemocrat]

63. I thought I was the only one who felt this way.

High energy prices might make people conserve, and government/businesses might invest in renewable energy R&D. If we could reduce our consumption of oil it would be good for the environment and good for our country's security. I mean, it seems to me if we are energy self-sufficient that could only be a good thing. Right?

[midnight]

68. Will this impact the oil profits for cheny or

will we be the only ones to reduce?

[Wednesdays]

61. Lying, insane, or Republican...

You're being redundant, aren't ya? ;-)

[Demeter]

66. It's A Literary and Rhetorical Device

I felt like speechifying.

[Joanne98]

3. SHRINKAGE and INFLATION!

What's that called? The MISERY INDEX?

[skids]

44. It's called...

...printing money out of nowhere and spending it on nothing of benefit.

[saigon68]

4. Not true

Just ask the AWOL CHIMPANZEE

[marmar]

5. Of course not...

This is just a sign that my tax cuts are helping prevent gay marriage so we can stop the terra by invading Iran. Bush-logic.

[saigon68]

8. LOL

[patcox2]

6. Stagflation. How bad would it be if true inflation numbers are used?

This is deliberate. This way, the Bush debt is eroded away by inflation, but the workers don't have their pay increased by inflation.

[Ezlivin]

7. A couple of new wars should help out

War is good for the economy, right?

[dipsydoodle]

9. core prices - excluding food and energy ?

Check this for UK comparison : http://www.incomesdata.co.uk/statistics/statrpi.htm

I'm not saying you've got a distortion if food and energy have never been included but what are the figures with their inclusion ? Do you use a different index to include those ?

[NorthernSun]

12. Actual inflation up 4.0% - Media doesn't like to print it anymore.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 4.0 percent in the second quarter, compared with an increase of 2.7 percent in the first.
Excluding food and energy prices, the price index for gross domestic purchases increased 2.9 percent in
the second quarter, compared with an increase of 3.0 percent in the first.

http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm

4% per quarter = 16% per year.

[raccoon]

26. Ouch. Haven't seen that since the early 80's. nt

[dipsydoodle]

30. Much appreciated

If that 16% is real then I'd say you've got real problems lying ahead. The figures on the link I gave were annual for the UK. Last time we had anything like 16% was the early nineties and it was a true nightmare.

I'm surprised your media don't mention it - ours would have field day.

[truth2power]

34. Could someone please give me, from the govt point of view

why they think EXCLUDING food and energy makes it a valid statistic? Food and energy are necessities. Difficult to cut back to any great extent and accounts for most of the cost of just getting by day to day.

[Javaman]

53. not to those repukes that drink blood. LOL nt.

[RawMaterials]

62. They are trying to make it less volatile

because those things can swing so much. thats why the switched from housing to rental prices(witch IMHO doesn't make sense i would think that rental prices would swing more then housing prices over the long turn) their should be short turn number weir food and energy are excluded but long turn numbers (like every year or two) in witch they are included in the calculations.

[truth2power]

64. Thanks. That makes sense. n/t

[corkhead]

43. I think they mean "at an annual rate of..."

I own a retail shop and I am beginning to really notice wholesale inflation, but not at double digit rates... at least not yet.

[KitSileya]

56. I'm not a math person, far far from it,

but wouldn't it be even more than 16% per year? I mean, second quarter would be 4% of 104%, third quarter would be 4% of the accumulated increase and so on? I'm not expressing myself very well, and my math could be totally wrong, but still.

Not that 4% inflation a quarter isn't much to begin with, but it seems to me it would be cumulative - and wages are not increasing to the same degree I know that. And if everyone's wages go the way of the minimum wage - no hike for 9 years ::shudder:: But those fat cat CEOs and their ilk must keep earning more money anyway. Traitors.

[newportdadde]

11. Stagflation yet Bernie and Wallstreet have coronaries if wages rise at all

But cheap interest is just fine and dandy.. its cool to have too much money as long as you BORROW it. This interest rate is still a joke, its still VERY low, hell 6 years ago I had a 30 year for 8.5% yet people are blowing gaskets over 6.5% loans. Still dirt cheap people.

Inflation is RAMPANT all of us peons who actually work for a check are seeing it eaten alive but a crazy housing market, rising healthcare and freakin gas much less the cost of food going up up

Turn off the money spicket before we all are pushing around a wheelbarrow full of greenbacks for a loaf of bread.

[Yavin4]

35. Amen

Amen brother. Amen. Cheap debt is the thin green line that keeps the masses at bay.

[jasmeel]

13. Economy slows sharply, inflation heats up

http://news.yahoo.com/s/ap/20060728/ap_on_bi_go_ec_fi/economy

<<WASHINGTON - The economy's growth slowed sharply in the second quarter, logging just a 2.5 percent pace as consumers tightened their belts and spending on home building nose-dived. Inflation, however, shot up.

The latest snapshot of gross domestic product released by the
Commerce Department on Friday showed that the overall pace of economic activity in the April-to-June quarter was less than half that of the January-to-March quarter, when the economy zipped along at a 5.6 percent annual rate, the fastest in 2 1/2 years.

Gross domestic product measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic standing.

"The economy has significantly throttled back but inflation pressures are developing more fully," observed Mark Zandi, chief economist at Moody's Economy.com>snip

Well duh!

[Drum]

14. It's the latest and biggest in a long string of enterprises

to get the golden touch of GWB and the clueless GOP. The bills should be forwarded directly to Bush voters.

[babylonsister]

15. Oops. Now what will dimson have to crow about? He's plum out

of ANY good news.

[NewJeffCT]

17. Easy

he will call for more tax cuts for the rich as the cure, saying the downturn was caused by Democrats in Congress not passing the Paris Hilton estate tax cut.

[KitSileya]

57. Or they'll puch the minimum wage increase thru,

with their f%&%ing inheritor tax cuts, and then blame the downturn on the increase and the Democrats. The idiots will believe it, and after the Democrats have struggled to put the ship of state on an even keel the next period, they'll vote the greedy little bastards back in again. It's enough to make anyone ask who people voted for before they help them - if they voted for Bush, show them the hand.


Gah! I can feel I'm getting more and more bitter. I think I need some ice cream as consolation.

[NewJeffCT]

16. I'm still trying to figure out how inflation is not higher?

I'm usually pretty good with economic issues, but it seems like the price of everything has gone up over the past year... heck, we were just at the local Staples to pick up a toner cartridge for our printer and the guy said that toner cartridges have been going up every month.

I mean, I used over 15% less electricity this year for mid-June to mid-July, the temperature avg was 1 degree cooler in CT than last year, yet my electricity bill went up from like $98 to $158!!!

I can only imagine what my bill would be if I had not bought energy star light bulbs and made a conscious effort to use less electricity (showering in the dark even!)

[ixion]

19. yeah, right?

I use about the same amount of power as I always have, but my electric bills this summer have been about 50 bucks higher than normal.

The price of everything is going up. How is that not inflation?

[NewJeffCT]

23. Part of the reason...

Well, part of it is because the published inflation rate excludes the cost of food and fuel, because you know those of us in the middle class and lower just don't need food or fuel to survive.

"They" say that food & fuel are excluded because of their volatility, but if my gas costs $3.12 this week and $2.89 next week and then $4.00 in late August due to a hurricane, it certainly does have an effect on me and millions of others.

[ixion]

31. yeah, excluding something just because it's volatile

is simply a statisticians way of fudging the numbers, IMO.

[Yavin4]

37. If The KC Roylas Could Exclude 50% of Their Losses

then they'd be having a hell of a season.

[DemsRBetterLovers]

65. have the royals ever been good?

just curious.

[newportdadde]

49. I love the volatility exclusion.

Lets give it the benefit of the doubt 30 cents battering back and forth is volatility.

When I got married Summer of 99 I filled up for 1.10. Gas is now 2.81. That not volatility thats a freakin joke and a direct hit in the wallet that isn't going away.

[lumpy]

45. The price of food /necessities

have been rising steadily year by year for may years , those of us on fixed income certainly can testify to that.

[NewJeffCT]

46. I've noticed it as well

And, even when items are on sale, the sales are quite as good as they used to be. For years, my local Big Box grocery store would alternate specials on orange juice - 2 half gallons for $4. One week, it would be Tropicana, the next would be Florida's Natural, and then back to Tropicana.

The past month or so, the special has been 2 for $5.

And, we would sometimes go out to eat at our local Friendly's restaurant on a weekend because we know my 3 1/2 year old daughter loves the food there, and the 3 of us can eat for $20-$25, including tips. But, the meals have been costing an extra few bucks lately...

[bronxiteforever]

18. Bushonomics at work

Burn gasoline at a great rate, curse conservation, go into massive debt (owned by other countries that compete) for an immoral war and cut the taxes of the wealthy and make us an international pariah and look what happens "frickin mission frickin accomplished"

[jasmeel]

20. I'm sure they're hiding the real numbers in Cheney's bunker.

They'll either overestimate incorrectly and celebrate that the numbers are lower than expected or they will hide the real numbers and these numbers are actually too low. That's their M.O.

[marmar]

50. Along with a bottle of anthrax...

:tinfoilhat:

[xchrom]

21. another bush failure.

[Jim__]

22. DOW rises!

Does anything make any sense? I know the market expects the Fed to stop raisng interest rates. But, it still seems ass backwards to me.

[mom cat]

24. It is precicely what the fat cats want: They ger richer while

we get poorer. That is the only economic principle that matters anymore.

[mom cat]

25. It is precicely what the fat cats want: They ger richer while

we get poorer. That is the only economic principle that matters anymore.

[Megahurtz]

33. Just what Bush raves about....

how "good" the economy is for all of his fat cats.:grr:

[skids]

28. Lately...

...I always index the dow by the value of the U.S. dollar before trying to interpret it. These days it seems the DOW is supported mostly by inflation.

[Yavin4]

38. It's Not Ass Backwards At All

DOW is up because they believe that the Fed won't hike rates in August because the economy is slow.

[scarface2004]

29. so!

it was never that great to begin with...if an economist's lips are moving.....

[area51]

32. Economy

The economy's been slowing ever since GW Hoover first stole the White House.

[Yavin4]

36. But, Gays Still Can't Get Married

Because that's the role of government. Stop Gay people from getting married.

[onehandle]

41. Imagine how bad the economy would be if they could marry?

I should write ads for the GOP.

[jayfish]

39. "The 2.5 Percent Pace Was The Slowest Since a 1.8 Percent Growth Rate..."

in final quarter of 2005, when the economy was suffering fallout from the devastating Gulf Coast hurricanes.

Sheesh, they try to make it sound like it was 25 years ago. Uhhh, it was 2 quarters ago. The media will find any little trick in it's book to shade *'s failures. On the actual topic; it looks like people are done spending their tax refunds.

Jay

[onehandle]

40. ...whenever a Bush is in office. nt

[marmar]

48. So so true...

Under two Bushes, we've had two (perhaps three) recessions, three wars, the largest attack on this nation and off-the-chart deficits. No mas, por favor.
As Jesse Jackson said in 2000: "Stay out of the bushes!"

[yorkiemommie1]

42. I've ...

Had Enough!

[redqueen]

47. they still using those fancy stupid mortgage loans as part of GDP?

reckless assholes!

[corporatemedia]

51. "...investors welcome signs of an economic slowdown..." CNN Money n/t

[marmar]

54. Capitalists Gone Wild...

Kinda like those "Girls Gone Wild" videos. Capitalism is out of control and eating itself.

[truthisfreedom]

55. God is punishing us for the gays!

either that, or bushco sucks. take your pick.

[HockeyMom]

58. Flippers Left Holding the Bag

Seeing it all around me now.

[redacted]

59. marmar, what is the source of that article?

Can't find any listed at the peoplepc.com link.

[marmar]

60. Really? They must have taken it off...

It's an AP story, and if you check out News on either the PeoplePC home page or Yahoo, it should be there.
EDIT TO MESSAGE:
I just tried the link again and it worked fine.

[michaelpush]

67. Perhaps if PEOPLE slow down

on the interstate, saving gas, the price might drop, and reverse some of the trend...nope, that isn't going to happen! I drive 60 mph, people fly by me. Lets put some of the blame where it belongs, the american people who refuse to do what they can to help.

I am not surprised at all though, been predicting it for years. This is just the beginning folks, hold on tight, the ride is going to get rough!